Your memorandum of 21 September 196322. Document 142. directed that General
Taylor and Secretary
McNamara proceed to South
Vietnam to appraise the military and para-military effort to defeat the
Viet Cong and to consider, in consultation with Ambassador Lodge, related political and social
questions. You further directed that, if the prognosis in our judgment
was not hopeful, we should present our views of what action must be
taken by the South Vietnam Government and what steps our Government
should take to lead the Vietnamese to that action.

Accompanied by representatives of the State Department, CIA, and your Staff, we have conducted an
intensive program of visits to key operational areas, supplemented by
discussions with U.S. officials in all major U.S. Agencies as well as
officials of the GVN and third
countries.

We have also discussed our findings in detail with Ambassador Lodge, and with General Harkins and Admiral Felt.

The following report is concurred in by the Staff Members of the mission
as individuals, subject to the exceptions noted.

I. CONCLUSIONS AND RECOMMENDATIONS

A. Conclusions.

1. The military campaign has made great progress and continues to
progress.

2. There are serious political tensions in Saigon (and perhaps elsewhere
in South Vietnam) where the Diem-Nhu
government is becoming increasingly unpopular.

3. There is no solid evidence of the possibility of a successful coup,
although assassination of Diem
or Nhu is always a
possibility.

4. Although some, and perhaps an increasing number, of GVN military officers are becoming hostile
to the government, they are more hostile to the Viet Cong than to the
government and at least for the near future they will continue to
perform their military duties.

5. Further repressive actions by Diem and Nhu
could change the present favorable military trends. On the other hand, a
return to more moderate methods of control and administration, unlikely
though it may be, would substantially mitigate the political crisis.

6. It is not clear that pressures exerted by the U.S. will move Diem and Nhu toward moderation. Indeed, pressures may increase
their obduracy. But unless such pressures are exerted, they are almost
certain to continue past patterns of behavior.

B. Recommendations.

We recommend that:

1. General Harkins review with
Diem the military changes
necessary to complete the military campaign in the Northern and Central
areas (I, II, and III Corps) by the end of 1964, and in the Delta (IV
Corps) by the end of 1965. This review would consider the need for such
changes as:

a. A further shift of military emphasis and strength to the Delta (IV
Corps).

b. An increase in the military tempo in all corps areas, so that all
combat troops are in the field an average of 20 days out of 30 and
static missions are ended.

c. Emphasis on “clear and hold operations” instead of terrain sweeps
which have little permanent value.

d. The expansion of personnel in combat units to full authorized
strength.

e. The training and arming of hamlet militia to an accelerated rate,
especially in the Delta.

f. A consolidation of the strategic hamlet program, especially in the
Delta, and action to insure that future strategic hamlets are not built
until they can be protected, and until civic action programs can be
introduced.

2. A program be established to train Vietnamese so that essential
functions now performed by U.S. military personnel can be carried out by
Vietnamese by the end of 1965. It should be possible to withdraw the
bulk of U.S. personnel by that time.

3. In accordance with the program to train progressively Vietnamese to
take over military functions, the Defense Department should announce in
the very near future presently prepared plans to withdraw 1000 U.S.
military personnel by the end of 1963. This action should be explained
in low key as an initial step in a long-term program to replace U.S.
personnel with trained Vietnamese without impairment of the war
effort.

4. The following actions be taken to impress upon Diem our disapproval of his political
program.

a. Continue to withhold commitment of funds in the commodity import
program, but avoid a formal announcement. The potential significance of
the withholding of commitments for the 1964 military budget should be
brought home to the top military officers in working level contacts
between USOM and MACV and the Joint General Staff; up to
now we have stated $95 million may be used by the Vietnamese as a
planning level for the commodity import program for 1964. Henceforth we
could make clear that this is uncertain both because of lack of final
appropriation action by the Congress and because of executive
policy.

b. Suspend approval of the pending AID
loans for the Saigon-Cholon Waterworks and Saigon Electric Power
Project. We should state clearly that we are doing so as a matter of
policy.

c. Advise Diem that MAP and CIA
support for designated units, now under Colonel Tung's control (mostly held in or near
the Saigon area for political reasons) will be cut off unless these
units are promptly assigned to the full authority of the Joint General
Staff and transferred to the field.

As we pursue these courses of action, the situation must be closely
watched to see what steps Diem
is taking to reduce repressive practices and to improve the
effectiveness of the military effort. We should set no fixed criteria,
but recognize that we would have to decide in 2-4 months whether to move
to more drastic action or try to carry on with Diem even if he had not taken
significant steps.

5. At this time, no initiative should be taken to encourage actively a
change in government. Our policy should be to seek urgently to identify
and build contacts with an alternative leadership if and when it
appears.

6. The following statement be approved as current U.S. policy toward
South Vietnam and constitute the substance of the government position to
be presented both in Congressional testimony and in public
statements.

a. The security of South Vietnam remains vital to United States security.
For this reason, we adhere to the overriding objective of denying this
country to Communism and of suppressing the Viet Cong insurgency as
promptly as possible. (By suppressing the insurgency we mean reducing it
to proportions manageable by the national security forces of the GVN, unassisted by the presence of U.S.
military forces.) We believe the U.S. part of the task can be completed
by the end of 1965, the terminal date which we are taking as the time
objective of our counterinsurgency programs.

b. The military program in Vietnam has made progress and is sound in
principle.

c. The political situation in Vietnam remains deeply serious. It has not
yet significantly affected the military effort, but could do so at some
time in the future. If the result is a GVN ineffective in the conduct of the war, the U.S. will
review its attitude toward support for the government. Although we are
deeply concerned by repressive practices, effective performance in the
conduct of the war should be the determining factor in our relations
with the GVN.

d. The U.S. has expressed its disapproval of certain actions of the
Diem-Nhu regime and will do so again if
required. Our policy is to seek to bring about the abandonment of
repression because of its effect on the popular will to resist. Our
means consist of expressions of disapproval and the withholding of
support from GVN activities that are not
clearly contributing to the war effort. We will use these means as
required to assure an effective military program.

From the above analysis it is clear that the situation requires a
constant effort by the U.S. to obtain a reduction of political tensions
and improved performance by the Vietnamese Government. We cannot say
with assurance whether the effort against the Viet Cong will ultimately
fail in the absence of major political improvements. However, it does
seem clear that after another period of repressive action progress may
be reduced and indeed reversed. Although the present momentum might
conceivably continue to carry the effort forward even if Diem remains in power and political
tensions continue, any significant slowing in the rate of progress would
surely have a serious effect on U.S. popular support for the U.S.
effort.

VII. U.S. LEVERAGES TO OBTAIN DESIRED CHANGES IN THE DIEM
REGIME

A. Conduct of U.S. Representatives.

U.S. personnel in Saigon might adopt an attitude of coolness toward their
Vietnamese counterparts, maintaining only those contacts and
communications which are necessary for the actual conduct of operations
in the field. To some extent this is the attitude already adopted by the
Ambassador himself, but it could be extended to the civilian and
military agencies located in Saigon. The effect of such action would be
largely psychological.

B. Economic Leverage.

Together, USOM's Commodity Import
Program (CIP) and the PL 480 program account for between 60 and 70
percent of imports into Vietnam. The commitment of funds under the
CIP has already been suspended.
CIP deliveries result in the
generation of piastres, most of which go to the support of the defense
budget. It is estimated that CIP
pipelines will remain relatively large for some five or six months, and
within this time period there would not be a serious material effect.
Even within this period, however, the flow of piastres to support the
defense budget will gradually begin to decline and the GVN will be forced to draw down its foreign
exchange reserves or curtail its military expenditures.

Within the domestic economy the existing large pipelines would mean that
there would be no material reason for inflation to begin in the short
term period. However, the psychological effect of growing realization
that the CIP program has been suspended
might be substantial in 2-4
months. Saigon has a large number of speculative traders, and although
there is considerable police effort to control prices, this might not be
able to contain a general trend of speculation and hoarding. Once
inflation did develop, it could have a serious effect on the GVN budget and the conduct of the war.

Apart from CIP, two major AID projects are up for final approval—the
Saigon-Cholon Waterworks ($9 million) and the Saigon Electric Power
Project ($4 million). Suspension of these projects would be a possible
means of demonstrating to Congress and the world that we disapprove of
GVN policies and are not providing
additional aid not directly essential to the war effort.

C. Paramilitary and Other Assistance.

(1) USOM assistance to the Combat Police
and USOM and USIS assistance to the Director General of Information and
the ARVN PsyWar Program could be
suspended. These projects involve a relatively small amount of local
currency but their suspension, particularly in the case of USIS, might adversely affect programs
which the U.S. wishes to see progress.

(2) However, there would be merit in a gesture aimed at Colonel Tung, the Special Forces Commander,
whose forces in or near Saigon played a conspicuous part in the pagoda
affair and are a continuing support for Diem. Colonel Tung commands a mixed complex of forces, some of which
are supported by MAP and others
presently through CIA. All of those now
in or near Saigon were trained either for combat missions or for special
operations into North Vietnam and Laos. Purely on grounds of their not
being used for their proper missions, the U.S. could inform Diem that we would cut off MAP and CIA
support unless they were placed directly under Joint General Staff and
were committed to field operations.

The practical effect of the cut-off would probably be small. The
equipment cannot be taken out of the hands of the units, and the pay
provided to some units could be made up from the GVN budget. Psychologically, however, the significance of
the gesture might be greater. At the least it would remove one target of
press criticism of the U.S., and would probably also be welcomed by the
high military officers in Vietnam, and certainly by the disaffected
groups in Saigon.

At the same time, support should continue, but through General Harkins rather than CIA, for border surveillance and other
similar field operations that are contributing to the war effort.

We have weighed this cut-off action carefully. It runs a risk that
Colonel Tung would refuse to
carry out external operations against the Lao corridor and North
Vietnam. It might also limit CIA's
access to the military. However, U.S. liaison with high military
officers could probably be
fully maintained through the U.S. military advisors. On balance, we
conclude that these possible disadvantages are outweighed by the gains
implicit in this action.

(3) Consideration has been given both by USOM and the military (principally the JCS in Washington) to the possibility of
redirecting economic and military assistance in such a fashion as to
bypass the central government in Saigon. Military studies have shown the
technical feasibility, though with great difficulty and cost, of
supplying the war effort in the countryside over lines of communications
which do not involve Saigon, and it is assumed that the same conclusions
would apply to USOM deliveries to the
field under the rural strategic hamlet program. However, there is a
consensus among U.S. agencies in Saigon that such an effort is not
practical in the face of determined opposition by the GVN unless, of course, a situation had
developed where the central government was no longer in control of some
areas of the country. Nor is it at all clear that such diversion would
operate to build up the position of the military or to cut down
Nhu's position.

D. Propaganda.

Although the capability of USIS to
support the United States campaign of pressure against the regime would
be small, the Ambassador believes consideration must be given to the
content and timing of the United States pronouncements outside the
country. He has already suggested the use of the Voice of America in
stimulating, in its broadcasts to Vietnamese, discussions of democratic
political philosophies. This medium could be used to exploit a wide
range of ascending political pressure. In addition, a phased program of
United States official pronouncements could be developed for use in
conjunction with the other leverages as they are applied. We must
recognize the possibility that such actions may incite Diem to strong countermeasures.

E. The Leverage of Conditioning Our Military Aid
on Satisfactory Progress.

Coupled with all the above there is the implicit leverage embodied in our
constantly making it plain to Diem and others that the long term continuation of
military aid is conditioned upon the Vietnamese Government demonstrating
a satisfactory level of progress toward defeat of the insurgency.

F. Conclusions.

A program of limited pressures, such as the CIP suspension, will not have large material effects on the
GVN or the war effort, at least for
2-4 months. The psychological effects could be greater, and there is
some evidence that the suspension is already causing concern to Diem. However, the effect of
pressures that can be carried out over an extended period without
detriment to the war effort is probably limited with respect to the
possibility of Diem making
necessary changes.

We have not analyzed with care what the effect might be of a far more
intensive level of pressure such as cessation of MAP deliveries or long continued suspension of the
commodity import program. If the Diem government should fail to make major improvements,
serious consideration would have to be given to this possible course of
action, but we believe its effect on the war effort would be so
serious—in psychological if not in immediate material terms—that it
should not be undertaken at the present time.

VIII. COUP POSSIBILITIES

A. Prospects of a Spontaneous Coup.

The prospects of an early spontaneous replacement of the Diem Regime are not high. The two
principal sources of such an attempt, the senior military officers and
the students, have both been neutralized by a combination of their own
inability and the regime's effective countermeasures of control. The
student organizations have been emasculated. The students themselves
have displayed more emotion than determination and they are apparently
being handled with sufficient police sophistication to avoid an
explosion.

The generals appear to have little stomach for the difficult job of
secretly arranging the necessary coalescence of force to upset the
Regime.

Diem/Nhu are keenly aware of the capability of the generals
to take over the country, utilizing the tremendous power now vested in
the military forces. They, therefore, concentrate their manipulative
talent on the general officers, by transfers, and by controls over key
units and their locations. They are aware that these actions may reduce
efficiency, but they tolerate it rather than risk the prospect that they
be overthrown and their social revolution frustrated. They have
established a praetorian guard to guarantee considerable bloodshed if
any attack is made. The generals have seen slim hope of surmounting
these difficulties without prohibitive risk to themselves, the unity of
the Army and the Establishment itself.

Despite these unfavorable prospects for action in the short term, new
factors could quickly arise, such as the death of Diem or an unpredictable and even
irrational attack launched by a junior officer group, which would call
urgently for U.S. support or counteraction. In such a case, the best
alternative would appear to be the support of constitutional continuity
in the person of the Vice President, behind whom arrangements could be
developed for a more permanent replacement after a transitional
period.

These features must be weighed, however, against the possible results of
growing dominance or succession by Nhu, which would continue and even magnify the present
dissension, unhappiness and unrest.

C. Possible U.S. Actions.

Obviously, clear and explicit U.S. support could make a great difference
to the chances of a coup. However, at the present time we lack a clear
picture of what acceptable individuals might be brought to the point of
action, or what kind of government might emerge. We therefore need an
intensive clandestine effort, under the Ambassador's direction, to
establish necessary contacts to allow the U.S. to continuously appraise
coup prospects.

If and when we have a better picture, the choice will still remain
difficult whether we would prefer to take our chances on a spontaneous
coup (assuming some action by Diem and Nhu
would trigger it) or to risk U.S. prestige and having the U.S. hand show
with a coup group which appeared likely to be a better alternative
government. Any regime that was identified from the outset as a U.S.
“puppet” would have disadvantages both within South Vietnam and in
significant areas of the world, including other underdeveloped nations
where the U.S. has a major role.

In any case, whether or not it proves to be wise to promote a coup at a
later time, we must be ready for the possibility of a spontaneous coup,
and this too requires clandestine contacts on an intensive basis.

IX. ANALYSIS OF ALTERNATIVE POLICIES

Broadly speaking, we believe there are three alternative policies the
U.S. could pursue to achieve its political and military objectives:

1. Return to avowed support of the Diem regime and attempt to obtain the necessary
improvements through persuasion from a posture of “reconciliation.” This
would not mean any expression of approval of the repressive actions of
the regime, but simply that we would go back in practice to business as
usual.

2. Follow a policy of selective pressures: “purely correct” relationships
at the top official level, continuing to withhold further actions in the
commodity import program, and making clear our disapproval of the
regime. A further element in this policy is letting the present
impression stand that the U.S. would not be averse to a change of
Government—although we would not take any immediate actions to initiate
a coup.

3. Start immediately to promote a coup by high ranking military officers.
This policy might involve more extended suspensions of aid and sharp
denunciations of the regime's actions so timed as to fit with coup
prospects and planning.

Our analysis of these alternatives is as follows:

1. Reconciliation.

We believe that this course of action would be ineffective from the
standpoint of events in South Vietnam alone, and would also greatly
increase our difficulties in justifying the present U.S. support effort
both to the Congress and generally to significant third nations. We are
most unlikely, after recent events, to get Diem to make the necessary changes; on the contrary, he
would almost certainly regard our reconciliation as an evidence that the
U.S. would sit still for just about anything he did. The result would
probably be not only a continuation of the destructive elements in the
Regime's policies but a return to larger scale repressions as and when
Diem and Nhu thought they were necessary. The
result would probably be sharp deterioration in the military situation
in a fairly short period.

2. Selective Pressures.

We have examined numerous possibilities of applying pressures to
Diem in order to incline him
to the direction of our policies. The most powerful instrument at our
disposal is the control of military and economic aid but any
consideration of its use reveals the double-edged nature of its effects.
Any long-term reduction of aid cannot but have an eventual adverse
effect on the military campaign since both the military and the economic
programs have been consciously designed and justified in terms of their
contribution to the war effort. Hence, immediate reductions must be
selected carefully and be left in effect only for short periods.

We believe that the present level of pressures is causing, and will
cause, Diem some concern, while
at the same time not significantly impairing the military effort. We are
not hopeful that this level (or indeed any level) of pressure will
actually induce Diem to remove
Nhu from the picture
completely. However, there is a better chance that Diem will at least be deterred from
resuming large scale oppressions.

At the same time, there are various factors that set a time limit to
pursuing this course of action in its present form. Within 2-4 months we
have to make critical decisions with the GVN about its 1964 budget and our economic support level.
In addition, there is a significant and growing possibility that even
the present limited actions in the economic field-more for psychological
than for economic reasons would start a wave of speculation and
inflation that would be difficult to control or bring back into proper
shape. As to when we would reverse our present course, the resumption of
the full program of economic and military aid should be tied to the
actions of the Diem
government.

As a foundation for the development of our long-term economic and
military aid programs, we believe it may be possible to develop specific
military objectives to be achieved on an agreed schedule. The extent to
which such objectives are met, in conjunction with an evaluation of the
regime's political performance, would determine the level of aid for the
following period.

3. Organizing a Coup.

For the reasons stated earlier, we believe this course of action should
not be undertaken at the present time.

On balance we consider that the most promising course of action to adopt
at this time is an application of selective short-term pressures,
principally economic, and the conditioning of long-term aid on the
satisfactory performance by the Diem government in meeting military and political
objectives which in the aggregate equate to the requirements of final
victory. The specific actions recommended in Section I of this report
are consistent with this policy.

3 Mr. Colby believes that the official “correct”
relationship should be supplemented by selected and restricted
unofficial and personal relationships with individuals in the GVN, approved by the Ambassador, where
persuasion could be fruitful without derogation of the official U.S.
posture. [Footnote in the source text.]

4 Mr. Sullivan (State) believes that a
replacement regime which does not suffer from the overriding danger
of Nhu's ambition to
establish a totalitarian state (the control of which he might easily
lose to the Communists in the course of his flirtations) would be
inevitably better than the current regime even if the former did
have the deficiencies described. [Footnote in the source
text.]